The Best Online Stock Brokers of 2008 – Finding the Stock Broker That’s Right for You

The Best Online Stock Brokers of 2008 – Finding the Stock Broker That’s Right for You

The Best Online Stock Brokers of 2008 – Finding the Stock Broker That’s Right for You

Buying stocks is one of the busiest activities in the business world today. Online stock brokers allow you to bridge the gap between Wall Street and Main Street, so you can trade stocks instantly with the click of a button.

I’ve answered questions about “how to buy stocks” before, so let’s explore your options when it comes to online brokers. There are many factors that should guide your decision, here are what I believe are the main factors in deciding which stockbroker is right for you:

  1. Customer satisfaction
    • This is probably the most important aspect of any online broker in my opinion. How do people feel about the service they receive? This includes a sense of security that comes with larger brokers with hundreds of thousands of customers and local branches you can visit for support. Does your broker assign a separate broker for each account or do you do it yourself? In addition to support features, people will usually report on how quickly transactions are completed, which can be important in getting the best price for your trades.
  2. Commission fees
    • For me, this is probably even more important than satisfaction, since I have less money at stake than the average investor. In short, brokers charge commissions on every trade you make to deal with transaction costs… how expensive are they? These costs can be anywhere from $1 to $20 per trade, so this can be a huge factor…or a non-factor…it all depends on how much money you have in your account.
  3. Minimum deposit
    • Again, this may not be a factor for some, but it’s definitely something to keep in mind if you’re an average investor. Do you want that discount broker that has a minimum deposit of only $500…or will you look for the full service kings that require over $10,000 minimum in your account to get started.
  4. Research / Features
    • Research is very important for any broker. Some of these daily brokers offer you nothing in the way of research. Most of the more established guys will give you free reports from Standard & Poor’s, Goldman Sachs, Reuters and other places that can help you make smart trades. In addition to research, features such as live stock tickers, aftermarket trading and even technical chart analysis should be important aspects of your broker. If you have the tools to be successful, you are much more likely to make money.
  5. “The Catch”
    • What’s the catch? You should do your homework before choosing a broker. One of the reasons I like Scottrade is that they don’t seem to have any since all trades are only $7 forever. Other services have introductory deals that expire after the first month. For example, E-Trade has a free trade of 100 trades, but when you read it… it only lasts for the first 30 days. Other brokers will raise commissions periodically or charge you quarterly account fees to hold your money. Finding any hidden terms is important and can make or break your financing.

Now that we know what we’re looking for in a broker, it’s time to look at what stock brokers are out there that you can use and how these five categories I’ve outlined stack up for you to apply when deciding where to keep your money. Introducing the Net Fool’s 2008 Online Stock Broker Value Rankings

  1. E-commerce
  2. Scottrade
  3. TradeKing
  4. Charles Schwab
  5. interactive brokers
  6. TD Ameritrade
  7. Commercial securities
  8. Xpress options
  9. Muriel Seibert
  10. faithfulness
  11. Bunny
  12. Sharebuilder

These rankings are based on my own experience, shared feedback from sources such as Barron’s, Standard & Poor’s, Forbes, Kiplinger and MSN Money. Please note that the ranking is weighted towards lower commission/lower deposit “value” brokers, although all satisfaction and features are accurately represented.

Finding the right stockbroker can be a real judgement, and the ‘top 12’ options are all very good services. While I think it would be best with an E-Trade or Scottrade account, having a ShareBuilder or Zecco account wouldn’t be the worst option. If you’re investing a lot of money, you should focus more on features and satisfaction, so a brokerage like Schwab, Fidelity, or Muriel Siebert will suit your needs if commissions really aren’t a factor for you.

I hope you found this guide useful. Online discount brokers are a relatively new phenomenon and are improving by the day… making it easier, cheaper and faster than ever to trade and make money in the stock market.

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